Europe

Tuesday, October 16, 2012 - 05:00

Analysis: Eurozone SA Trade Surplus At Record High In August


Seasonally adjusted results:

August preliminary: +E9.9 billion July revision: +E7.2 bln (+E7.9 bln) June revision: +E9.5 bln (+E9.3 bln) May unrevised: +E6.7 bln April unrevised: +E4.9 bln March revision: +E4.8 bln (+E4.6 bln)

Non-seasonally adjusted results:

August preliminary: +E6.6 billion July revision: +E14.7 bln (+E15.6 bln) June revision: +E13.7 bln (+E13.6 bln) May revision: +E7.4 bln (+E7.1 bln) April revision: +E4.3 bln (+E4.2 bln) March revision: +E7.7 bln (+E7.4 bln)

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PARIS (MNI) - Eurozone exports rebounded in August faster than imports in seasonally adjusted terms, boosting the trade surplus to a series high of E9.9 billion, according to preliminary estimates released Tuesday by Eurostat.

Exports bounced back 3.7% on the month after a 2.2% downturn in July. Imports were up 2.1% after -0.8%. The average two-month adjusted surplus widened to E8.6 billion from E7.0 billion in 2Q, pointing to another positive contribution to quarterly GDP growth.

Without solid contributions to growth from foreign trade, the Eurozone would have been in recession for over a year.

In unadjusted terms, however, the trade surplus fell to a four-month low of E6.6 billion from E14.7 billion in July. Exports dropped 6.7% on the month but were still 10.4% higher on the year. Imports dipped 1.2% on the month and were 1.3% above the previous-year level. Results for the first eight months of the year showed a trade surplus of E46.9 billion compared to a deficit of E26.8 billion a year earlier, with exports up 9.0% on the year and imports up 2.5%.

Unadjusted data for January-July show the Eurozone's energy imports up 11% on the year, boosting the seven-month energy deficit to E205.0 billion. Raw material imports were 5% lower on the year for a trade shortfall of E22.3 billion. Manufactured goods exports were 8% higher on the year for a surplus of E244.8 billion. Exports to China were up 9.7% on the year, while imports were down 0.2%.

With domestic demand contracting as fiscal policy tightens, foreign trade is likely to be the primary motor of Eurozone economic growth over the medium term. Yet foreign demand is losing steam. The IMF now expects a greater slowdown in imports by emerging economies this year and next, while imports by advanced economies next year would regain only about half the momentum lost this year.

The factory PMIs show export orders falling at an ever faster pace since February. Eurozone manufacturers' assessment of export order books in September slumped to the lowest level in 28 months, according to a European Commission survey. Producers consider their competitive position in overseas markets to be deteriorating and expect export volumes to have contracted in 3Q for the first time in three years.

Yet anemic domestic production and the drawdown in inventories may dampen imports even more. Prices for non-fuel commodity imports are coming down and the IMF expects a further retreat next year. Oil market fundamentals also point to some easing in prices over the medium term.

The Commission sees growth in Eurozone exports outpacing imports this year 0.9% to 0.2%, adding 0.8 point to GDP growth. Next year the boost from foreign trade would decline by half, with exports growing by 2.1% and imports by 1.7%.

--Paris newsroom +331 4271 5540; email: ssandelius@mni-news.com

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